4.
(iii)
(iv)
and therefore difficult to explain to the Chinese; appears to claim powers beyond 1997 and therefore as difficult for the Chinese to accept as a straight lease beyond that date; less apparent certainty than a straightforward lease and therefore less good for confidence.
Periodicleases with a termination bar dated 1997 (not included in the AG's paper). Advantages: no apparent claim to juris- diction beyond 1997; allows automatic renewal without any positive action; assessment of post 1997 value dependent on a political judgement of continuity of, at least, the present system of property ownership. Disadvantages: emphasises 1997; less certainty of tenure than a fixed lease or, arguably, a more distant termination bar.
Leases expiring in 1997 but with an option of renewal. Advantages: no legislation required; the renewal option would be exercised by the tenant. Dis- advantages: emphasis on 1997; less
apparent certainty of tenure than straight lease or automatic renewal.
We make the assumption that, if we adopted (i), the first such lease would be given to a Chinese organisation. Obviously they themselves would not challenge it in court. It is unlikely that anybody else would. But at some point there might be a legal challenge which might succeed. We would have to have a firm understanding that, if this happened, HMG would be prepared to re-establish the validity of the lease by issuing an Order-in-Council. At that stage the Chinese might be more willing to accept such a move than now since it would be assuring the existing titles of property held by their own organisations set at risk by an adverse court decision.
5.
I have set this out in some haste to catch today's bag. On present plans the AG will be in London from about 27 July - 15 August and available for discussions with the FCO Legal Adviser from 1 August. The Governor will also be back this weekend and will, I am sure, wish to discuss what should be included about land leases in the Secretary of State's briefing for Peking. Our present thinking is that he should be briefed to stress the need for confidence in land tenure post-1997 but not to go into detail. If the Chinese show interest he could then suggest that the technicalities should be pursued separately through the normal channels.
eve
cc R JT McLaren FCO
T JB George Peking
(D C Wilson)
fa